This Internet Blog attempts to exhibit the most meaningful Sentiment Indicators that we believe affect the performance of the market in different time frames; most are Contrarian extremes suggesting that the majority has adopted a certain trend fully at the point at which it is about to reverse. Included are also comments about the Indicators and any other facts or ideas that are pertinent to market action. To Post comments, just click on "comments" and write away.

Monday, August 8, 2011

It may take a long time to turn ships like the Queen
Elizabeth in the opposite direction, but it didn't take
long for Bernanke's QE II to reverse, just like the QE I
in 2010 ! From 3/9/09 to 4/23/10 the S&P500 rose 80%, then
corrected 14% by 8/26/10. So far the QE II reversal is 14%
after repricing the sugar high run up of 33%.
Although there may not be a QE III, since it is debatable
how effective the first two were, word is that Ben's
secret weapon, not used since WW II, is to lower longer
term Treasuries' yields, flattening the yield curve - not
next Tuesday, but maybe at Jackson Hole later this month.
At a gala dinner event, sponsored by Schwab, at the swank
Omni Hotel inSan Francisco, the main speaker - Frank
Holmes of US Global Funds - ended his slick talk with
probably the most important statement: a MIT study showing
that people who maintained a positive mental attitude
(PMA) were not only happier and healthier in life, but had
better intuition in investing.
That said, for the first time in many months, almost all
the Sentiment Indicators I follow have lined up on the
positive, oversold side, boding for a possible short term
rally soon:
The VIX upspike over 35 has shown recently that a rally is
due;
NASD to NYSE Volume for the weak was low, meaning less
speculation.
The CBOE Equity put/call ratio jumped to a high 85%;
The McClellan Oscillator is now at minus 111, with the
Summation going negative.
The AAII Bull/Bear survey is way fearful at 27 to 50.
And although huge outflows of Money Markets occurred due
to European holdings and zero rates, money also came out
of equity Mutual Funds.
For those readers who have followed my DITM, or covered
call strategy at the blog below, it has survived the 14%
correction quite well, so far. With the hoped for future
rally, the slightly "under water" positions will improve
and, over time, allow selling a lower 5 to 10% call on
higher dividend % and richer call premium due to the
higher volatility (VIX).

Last week, the book I wrote on it - Zero (IN)Tolerance -
was converted to an eBook on most eReaders except for
Amazon's Kindle (hopefully by December); it is on iPad,
Nook, Sony, Kobo, etc. by title or author.

Here are the Sentiment numbers:

MktSentiment

Last Week

Prev. Week

5 Yr HI

5 Yr LOW

DJIA:

11444

12143

14093

6626

Nasdaq:

2732

2756

2861

1114

S&P 500:

1199

1292

1561

683

CBOE Eq. put/call:

85

67

96-10/08

46-1/03

VIX:

32.0

25.3

90

8.8

McClellan Osc:

(111

(84)

108

(123)

McClellan Sum:

(275)

165

1568

(1514)

Newsletter Surveys

InvestorsIntel.Bull:

46.3

49.5

63

22.21

InvestorsIntel.Bear:

24.7

21.5

54.4

16

AAII Bull:

27.2

37.8

n/a

n/a

AAII Bear:

49.9

31.4

n/a

n/a

US Equity-1 week lag

n/a

(8.8B)

Money Market Flows

(65.8B)

(37.5B)

Baltic Dry Index:

1268

1278

11700

663

Bullish %:

30

59

89

2

Insider Corporate Sellers:

14:1

37:1

235:1

2.4:1

With record numbers of dollars coming out of Money Market Funds, mostly into the crowded trade of short term bonds, anyone who has a minimal knowledge of covered call options and/or an interest in hedging stock market exposure might want to check out: brentleonard.com for an alternative strategy that is low-risk as well as highly rewarding.For those of you wanting more details and actual trading results, a new book is available for $14.95 at Amazon.com: Zero (IN)Tolerance